What Is Customer Retention?
Customer retention is the ability of a business to retain customers. It is both a measure of customer loyalty and the capacity of the business to keep customers satisfied by good service and quality of the product sold.
The best customer for any business is the returning one. It shows that the customer is happy with both the service and the product but there are other benefits too. A returning customer is cheaper to the business, as they will need to spend less on advertising or inducements such as price cutting and giveaways. A happy customer will also tell other potential customers of a product and service; doing a job of marketing for the store.
Improving Customer Retention
Research indicates that returning customers tend to spend more. So along with the other benefits it is in a store’s interest to spend time and money on customer retention. There are many ways for the store to achieve this:
- Stock – by selling quality product the customer will be happy and likely to return for more.
- Pricing – in pricing a product at a reasonable one for the market the customer will consider returning to purchase more in the future.
- Customer Service – good customer service from the minute the client enters a store will help sales and the memory will stay with the customer. Good after sales customer service in the case of an issue, helps offset further problems and assures the customer of the store’s good intentions.
- Appealing Shop Layout – making a store easy to navigate, warm in the cold months, cool in the summer ones and customer friendly decor can help hugely in retaining a customer. Nobody will want to return to a cold store where product is difficult to find and the paint is peeling off the walls.
By keeping an eye on customers habits and seeing how many are returning, a storeowner can see where improvements are necessary. If the store has high customer retention they need to see why and ensure that they keep doing what they are doing well to maintain standards. The opposite is also true. If customer retention is low, items such as product, pricing and customer service need examining so as to retain that all important returning customer.